Dong-A Ilbo (March 24, 2010) “I’d hoped that the inter-Korean tours would be resumed after a hiatus of more than 20 months. But North Korea has threatened to seize our assets in the North. I’m just aghast.” Ilyeon Investment Chairman Ahn Gyo-shik is nervous over Pyongyang’s latest moves. “I feel helpless since our company is rattled by external conditions, not our management’s ability,” he said.
The North has threatened to seize real estate owned by South Korean businessmen unless they visit North Korea for a land survey by Thursday. Ahn said he will cross the inter-Korean border with staff from the subcontractors of Hyundai Asan Corp. early Thursday morning.
Since launching a tour to Mount Kumgang in 2003, Ahn has built Kumgang Family Beach Hotel (photo) and a sashimi restaurant in the North. He has even served as a chairman of the Corporate Conference for South Korean Companies Doing Business at Mount Kumgang, a gathering of Hyundai Asan’s subcontractors.
In an interview with The Dong-A Ilbo yesterday, Ahn said the head of a conference member company recently died of a heart attack due to severe stress from his business in North Korea. The suspension of the inter-Korean tours caused the late chairman’s company to teeter on the verge of bankruptcy, causing his death at age 55, Ahn said.
Ilyeon’s prospects are no better. Ahn has invested 14.7 billion won (12.9 million U.S. dollars) in his North Korea venture, including 13.4 billion won (11.8 million dollars) to build the hotel and additional facilities. His company is six billion won (5.3 million dollars) in the red due to the suspension of the Kumgang tour. Its deficit slightly decreased in early 2007, but the killing of a South Korean tourist at Mount Kumgang in July 2008 by a North Korean soldier dealt another serious blow.
Since the shooting, Ilyeon has slashed the number of hotel staff from 119 (including North Korean workers) to three. Over the same period, Ilyeon’s office in South Korea has also downsized from 15 workers to four. Ilyeon director Kim Rae-hyeon said, “Most member companies of the conference are almost bankrupt but cannot file for bankruptcy since their assets are in North Korea.”
On the North’s land survey Thursday, Ahn said, “Considering precedents and North Korea’s recent moves, Pyongyang is unlikely to make just empty threats. In the worst-case scenario, the North will confiscate assets held by South Korean companies after compensating South Korean investors with part of their investment.” Worryingly, a Chinese tourist agency has released a six-day tour of both Kaesong and Mount Kumgang. This could encourage the North to deprive South Korean companies of their right to run businesses in the North.
Yang Mu-jin, a professor at the University of North Korean Studies in Seoul, said, “North Korea could mention Hyundai Asan’s underpayment of 400 million dollars as grounds to freeze assets held by South Korean companies. The North could also freeze the properties of South Korean companies, force them to recall their staff, annul existing contracts, and sign contracts with new companies.” Other experts, however, say the North is unlikely to confiscate South Korean companies’ assets or deprive them of their exclusive right to do business.
For Thursday’s survey, Hyundai Asan said yesterday that 52 staff from 33 companies such as Hyundai Asan, its subcontractors, Korea Tourism Organization and Emerson Pacific will make the trip. Forty-eight workers from Hyundai Asan and its subcontractors had applied for their visit.
Shim Sang-jin, in charge of Mount Kumgang affairs for Hyundai Asan, will lead the group. The group will board a bus in Seoul and pass through the Customs, Immigration and Quarantine Office in Goseong County, Gangwon Province, around 9:40 a.m. Thursday. Officials of the tourism organization will head for the North today.